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Welcome to my BeyeNETWORK blog! Please join me often to share your thoughts and observations on new analytic platforms, BI and data management. I maintain a vendor-focused practice that uses primary research, briefings, case studies, events and other activities that stimulate ideas as a source for commentary on strategy and execution in the marketplace. I believe the emergence of a new class of analytic platforms, and emerging data management and advanced tools herald a next step in the maturity of information technology, and I'm excited to be present for its emergence. I hope my blog entries will stimulate ideas that will serve both the vendors creating these new solutions and the companies that will improve their business prospects as a result of applying them. Please share your thoughts and input on the topics.



Not everyone in the software industry is suffering. Informatica Q2 revenues were $117.3 million, up 3% year over year, and license revenues for the second quarter were $48.7 million, relatively flat. That makes 19 quarters in a row - very impressive. Informatica added 65 customers in the quarter and now claims nearly 3800, with wins in multiple geographies. 

Informatica continues to be well regarded by analysts - Gartner, for example, made it a Leader in the latest magic quadrant report. It has worked steadily to add features with a clear and clearly articulated vision and roadmap. The recent acquisition of AddressDoctor enhances its data quality capabilities, offering upside opportunities in its base as well as an ever-broadening value proposition. Today's announcement for cloud computing moves Power Center into the Amazon EC2 cloud, ticking that checkbox as well.  

Clearly, the strategic thrust is working; 55% of Informatica's 100K-plus deals in Q2 were in applications "beyond data warehousing," says CEO Sohaib Abbasi, validating the portfolio approach Informatica has taken, and an example win over IBM and SAP Business Objects cited in the investor call drove that story home. Breadth sustains the books in difficult times: although its consulting revenues are down, Informatica gained substantially in maintenance revenue. In reaping the 95% maintenance renewal rate annuity of its still-growing base and increasing deal size, Informatica continued to set itself up for the future - 9 deals in the quarter were over a million dollars. These large deals drive increasing maintenance revenues for the future as well. Global reach helps too: Latin America and Asia are still growing well enough to be touted as offsetting unfavorable currency impacts.

Informatica claims that it is "is not feeling price pressure," despite competition from open source and other vendors. The company has been able not only to grow revenue, but also increase margins. While part of this is clearly due to the multiple offerings in the portfolio, it is enhanced by the degree to which they are synergistic with one another. Not only new (and larger deal) business, but upside in the installed base, result from this synergy.

Informatica has an increasingly competitive road ahead in light of the investments being made by IBM and more recently Oracle. But it has withstood the heat well so far, managed its expenses and grown margins even as it prepares for a major release at yearend. With an upturn expected, Informatica's prospects appear good. The battles ahead will be high stakes and highly visible, and it can be expected to win (and even grow) its share. Sohaib asserted in today's call that only 5% of its deals compete with Oracle, and he doesn't believe the Goldengate acquisition will change much - Informatica rarely competed directly with them. That leaves IBM, and there we can expect to see some fireworks. Battling portfolios ahead.

Posted July 30, 2009 4:52 PM
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